|Arctic Oil Exploration Makes Progress|
Anchorage – The future exploration of oil and gas resources in the Alaskan Arctic improved its prospects in December with the granting of permits for on and offshore exploration and production projects. Both Shell Oil and ConocoPhillips won federal approval for long standing projects in the Chuckchi Sea and National Petroleum Reserve respectively.
Both projects have been mired in political permit wrangling with federal agencies in Washington due to their location on federal lands and offshore areas. The Chuckchi lease sale 198 which was dominated by Shell’s record breaking $2.1 billion bids netted Shell numerous leases which it planned to drill exploratory wells on. Those leases, lying 120-200 miles off Alaska’s northwest coast have been withheld from access by numerous lawsuits by environmental groups against the federal agencies responsible for issuing permits to explore. In mid December the Bureau of Ocean Energy Management (formerly the MMS) finally gave tentative approval for exploration go ahead by Shell pending their ability to demonstrate clean up capability of spills in moving ice. The window for operation of exploration was also decreased by 38 days from predicted ice closure. Exploration can only be done in summer ice free months. Shell and the State of Alaska stated that the reduction of the drilling window would put extreme financial pressure on the company to complete exploration due to the cost to maintain a production fleet compared to the work achievable in a shorter time frame. Fields become less economically feasible by the extreme cost to access them and with smaller operational windows will take longer to explore and develop before costs can be recouped. The North Slope Borough Mayor Charlotte Brower who stated opposition to offshore exploration without adequate spill prevention technology and practice echoed the States view on a negative effect of a longer drilling operation and a secondary effect of resulting of more ships and impact not less. This would counteract the potential benefit to a shortened season due to ice avoidance.
Onshore Arctic in the NPR-A ConocoPhillips benefited from US Corps of Engineers and EPA approval for a bridge over the Coleville River from CD-4 drill site to the proposed site at CD-5 just within the NPR-A lands. The CD-5 drill site will result in the first oil produced from Federal onshore lands in Alaska. So far over 99% of all oil that has travelled down the Trans Alaska Pipeline has been produced on State land. The CD-5 project was stopped when the EPA pressured the US Army Corps of Engineers from issuing a bridge building permit to Conoco across the Colville River due to placing the Colville on the Aquatic River of National Importance (ARNI) list. Many viewed the ARNI listing as a political ploy to try and prevent westward expansion of oil development across the Arctic. Both the State of Alaska and the native communities of the North Slope Borough support development in NPR-A. The CD-5 proposal by the Corps was to build an under river pipeline and have a roadless field at CD-5 to protect the river and wildlife. The proposal was viewed as ludicrous by many in the State and industry due to the difficulty in prevention of spills from buried pipelines, and the fact that having to fly in crews and supplies to CD-5 would create more environmental impact than simply building a road. ConocoPhillips has stated first construction will begin in 2014 and oil should flow by the end of 2015. Approximately 10,000 barrels a day, it is hoped, will eventually flow from CD-5. This will be a welcome measure to the ailing Trans-Alaska Pipeline (TAPS) which is already running less than 1/3rd full. TAPS can handle 2.1 million barrels per day.
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